Cheapest Merchant Accounts for Small Businesses

Retailers need merchant accounts to take payments via debit and credit card, and choosing the right account for your business can have a real impact on your bottom line.

However, prices can vary and tend to be less for more established businesses with lower credit risks, so it’s a good idea to review your merchant account annually to see if you can reduce your fees.

Here we review some of the merchant account providers available in the UK today.

CardSave Merchant Account

CardSave is a popular merchant account provider whose charges vary depending on the amount of money you take in through your transactions. They do have a fixed monthly cost of £19.99 but their transaction fees are amongst the lowest in the market.

CardSave charge different rates for debit and credit cards, with a percentage rate for the latter and a fixed price for the former. So if a business took sales of £1,500 in a month over 30 transactions split equally between credit and debit cards, the total charge including monthly account fees and transaction charges would be £38.50. This includes a payment gateway charge.

These charges also include a 7 day a week UK based customer service centre and agents who can support users in becoming PCI compliant. The notice period for CardSave merchant accounts is one month.

Sage Pay Merchant Account

Sage Pay offer users a merchant account that will accept debit and credit card payments. They have various fees based on the different types of transactions users make.

Credit cards are charged a 2.5% transaction fee, debit cards 40p per transaction, business cards attract a 2.5% premium charge, AMEX cards have a 1.68% transaction fee and cards processed without 3D secure have a 0.5% charge for credit cards and 0.10 p for debit cards.

On an £1,500 per month sale split between debit and credit cards, transaction fees would be around £24.75, however on top of this there is a £10 per month PCI compliance fee and a charge for a payment gateway. Sage Pay have a three month notice period on their merchant accounts.

Business Gateway Plus Merchant Account from Streamline

Streamline offer a business gateway account with a simple pricing model for small and medium sized businesses.

This solution is particularly suited to firms with a relatively low number of sales as the monthly fee includes 350 transactions regardless of value. The monthly fee is £19.95. However, if you exceed 350 sales in a particular month, then you are charged 10p for each additional one. This price includes multi-currency support and the ability to take PayPal payments too.

PayPal

PayPal also offer merchant accounts to businesses in the UK. Their pricing structure is based on monthly turnover. If your turnover is up to £1,500 per month, the fee is 3.4% per transaction +20p each, so based on 30 transactions, this would cost around £57 per month.

At the other end of the scale, for businesses whose turnover is in excess of £55,000 per month, the transaction fee reduces to 1.4%. However, if your account is not kept in good order, then PayPal can move users to the more costly standard account.

PayPal can be one of the more expensive providers of this service but it does have the benefit of being very quick and simple to set up.

How to Reduce Merchant Account Fees

There are a number of ways businesses can reduce their merchant account fees. Some merchant account providers offer users a discount if they are members of the Federation of Small Businesses (FSB). In some cases, for example with NatWest, the reduction can be significant (up to £250) whereas other providers may offer less than this. If you do opt for FSB membership it costs around £100, so make sure the savings you achieve will outweigh this investment.

More established businesses are often charged less as they are perceived to be less risky, so if you can prove your trading history to the account provider, they may well cut your costs.

Having a good credit rating, both personally and in terms of your business, can also reduce the amount you are charged.

Many providers will negotiate their fees so it is always worth contacting them to discuss the issue as many will be prepared to consider a reduction.